Like millions of other Americans, you may be focusing on eliminating debt and saving more money.
Grappling with a mounting pile of debt is one thing, but seeing no end in sight when trying to meet monthly payment minimums is an entirely different story.
It can seem impossible to get out of debt when you’re constantly broke and have bad credit.
If this sounds like you, it might be time to explore your debt relief options.
What’s Debt Relief?
Debt relief is a catch-all term for different options for reducing debt, whether on your own or through professional help.
Not everyone’s financial situation and financial responsibility is the same, which means there’s no one best option for everyone. Drafting a debt relief plan unique to your situation can help increase your chances of success.
If your debts have become too demanding and you’re feeling stuck, here are 7 simple steps and strategies you can implement today to get debt relief:
Step 1: Stop Borrowing Money
The first step in getting debt relief is to stop borrowing money.
Reshape your attitude toward money and debt. Avoid the temptation to create more debt by dumping your credit cards or even freezing your credit.
By freezing your credit, you’ll lock your credit reports to new inquiries and make it harder to apply for new credit on impulse. You can resolve to live on a cash basis as you make these changes.
Step 2: Fast-Track Debt Payments
You can accelerate debt payments by:
- Automating payments
Savvy savers put their savings on autopilot. If you want to get debt relief, try using similar tools and techniques to automate your debt payments.
A good strategy is using automatic transfers from your account to your credit card. If you’re paying off multiple debts at once, use automated reminders to keep track of payment deadlines.
A budgeting app or your bank’s app will help you track your progress.
- Adopting a debt payoff strategy
There are many methods of paying off debt, but debt snowball and debt avalanche are two of the most popular ones.
With debt snowball, you begin by paying off your smallest debt while still making the minimum payments on other debts you owe. You then proceed to the next smallest debt, and so on. The idea is to get a sense of momentum that builds with time, like a snowball rolling downhill.
With debt avalanche, you begin by paying off your highest-interest debt while making minimum payments on all other debts. You then proceed to the next highest-interest debt, and so on. The idea is to pay less interest over time by tackling the higher interest rate debts first.
Whichever method works for you, the important thing is the outcome: becoming debt-free.
Step 3: Squeeze More Savings from Your Budget
One sure way to pay off your debts faster is to spend less
Do you know how much money you spend every month?
If you don’t have a budget or haven’t updated yours in a while, use a budget-tracking app to identify recurring costs that could be avoided.
Most budgeting apps are either free of charge or charge a small fee after the trial period expires.
By looking for opportunities to cut spending, it will be easier to dedicate more money to getting rid of debt.
Even small cuts can add up fast. For example, if you can find $150 of spending that you can cut from your typical monthly budget, you would have $1,800 to put toward your debts after one year.
Step 4: Consider Debt Consolidation and Balance Transfers
You can combine multiple debts into one new loan and choose a new repayment term. If you have a savings or checking account with a bank or credit union, then you have a relationship with them and they may be willing to offer a debt consolidation loan.
Debt consolidation (what is debt consolidation?) allows you to independently restructure your debt by taking out a new loan or line of credit. These loans save you money on interest and help you pay off debt faster. But be careful not to incur additional debt while paying off the consolidation loan.
If you have a decent credit score and carry multiple credit card balances with high APRs, applying for a balance transfer credit card is something you may want to consider. Some balance transfer credit cards offer an introductory zero percent APR on the balance transfer amount.
While it doesn’t eliminate your debt, a balance transfer credit card lets you pay off your debt at a much lower interest rate.
Step 5: Supplement Your Income
Earning an extra income can help you get debt relief faster. The more money you dedicate toward your debt, the faster you can eliminate it for good.
Instead of engaging in leisure activities during your spare time, devote that time to making extra money. How much you make will depend on a few factors, such as how much free time you have outside of work and your skill set.
Whether you take a part-time job, pick up extra hours at work, sell items you no longer need, or start a lucrative side hustle, there is no shortage of options for making extra money.
When you get a windfall like a tax refund or inheritance, commit the money towards debt payment instead of splurging on yourself.
Step 6: Don’t Give Up: Get Consumer Credit Counseling
Consumer credit counseling agencies are nonprofits that can get you back on the right track if you’re struggling to pay your bills. Learn what is a guarantor. They can help you take a closer look at your spending and budget and draft a debt management plan to help you tackle debt faster. Read our article on the U.S. consumer debt.
You can find a credit counselor through the Financial Counseling Association of America or the National Foundation for Credit Counseling.
Step 7: Renegotiate Credit Card Debt
If you’ve fallen behind on credit card payments, request your creditors to renegotiate your debts and take a smaller payoff than the amount you owe (debt settlement).
Creditors may have payment modification programs and proprietary debt relief options you can explore, but you can’t know about them if you don’t reach out and explain your situation.
Click here to apply: https://apply.americor.com/new